Valero won’t appeal Texas tax break rejection

SAN ANTONIO (AP) – Valero Energy Corp. will not appeal the Texas environmental agency’s rejection of its request for a large tax break and potential $92 million refund at six Texas refineries, a company spokesman said Tuesday.

The San Antonio-based energy giant had hoped for a tax exemption for equipment installed at the refineries to remove sulfur dioxide from crude oil. However, the company decided not to appeal the rejection of its request by the Texas Commission on Environmental Quality, Valero spokesman Bill Day said.

Valero had no comment on its decision, he said.

Valero had until Tuesday to appeal the TCEQ rejection of requests Valero first made in 2007. Valero had argued that the hydrotreater equipment should be exempt because they help reduce pollution, and Texas grants tax breaks to companies that install pollution-reducing equipment at its plants. The rule is designed to encourage them to make expensive upgrades at old, dirty plants and refineries.

The hydrotreaters were installed after the U.S. Environmental Protection Agency in 2006 began requiring refineries to remove sulfur dioxide from crude oil.

In rejecting Valero’s initial request, the TCEQ stated the pollution reductions were being enjoyed in other regions, not where the refineries are located. Valero appealed and the commissioners asked the agency’s staff to consider a partial rejection. That, too, the TCEQ rejected.

Valero was among the nation’s largest oil refineries seeking huge tax refunds that could cause school districts and local governments across Texas to return tens of millions of dollars.

Consequently, Texas school district and municipal officials had long opposed the requests. School districts were especially concerned because if a refund had been granted it would have come on the heels of a $4 billion cut in state funding to public schools.

The TCEQ, a three-member commission appointed by Republican Gov. Rick Perry, is evaluating 16 refund requests that could add up to more than $135 million, according to county tax data and application documents analyzed by The Associated Press. If the commission granted all requests, at least 12 other refineries that have not sought a refund also could qualify.

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